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Asia Pacific markets started the trading week with gains despite China reporting that its economy grew at the lowest official pace in 28 years. Fourth quarter GDP growth was 6.4 percent, which was also in line with expectations. While Beijing’s official GDP figures are seen as one of the crucial indicators of China’s economic health, many outside experts have expressed skepticism about the veracity of the numbers. “Falling producer prices and new export orders point to a slowdown in China’s grow

Asia Pacific markets started the trading week with gains despite China reporting that its economy grew at the lowest official pace in 28 years.

The world’s second-largest economy grew 6.6 percent in 2018, which matched analysts’ expectations, and was lower than a revised 6.8 percent growth in 2017. Fourth quarter GDP growth was 6.4 percent, which was also in line with expectations.

“I think what we’re seeing actually in the fourth quarter is that while the economy is decelerating, we actually still have some of the supports,” Helen Zhu, head of China equities at Blackrock, told CNBC’s “Street Signs” on Monday. “For example, for most of the quarter, from the export front loading impact that we had probably before the Argentina G-20 (summit) when people’s expectations regarding trade became a little bit more optimistic.”

Chinese President Xi Jinping and U.S. President Donald Trump agreed to a 90-day pause in tariff escalation at the G-20 summit in Argentina late in 2018.

While Beijing’s official GDP figures are seen as one of the crucial indicators of China’s economic health, many outside experts have expressed skepticism about the veracity of the numbers.

Raymond Yeung, chief economist for Greater China at the Australia and New Zealand Banking Group, wrote in a note that China’s GDP numbers are “not an accurate gauge” of its economic growth. Still, he pointed out, the gap between the actual figures and the official targets usually shapes the government’s policy stance.

“Falling producer prices and new export orders point to a slowdown in China’s growth momentum,” Yeung added. “To celebrate the 70th anniversary of the founding of the People’s Republic of China in 2019, President Xi (Jinping) will still likely launch growth-supportive policies.”

The mainland Chinese markets, closely watched as a result of the ongoing U.S.-China trade fight, saw gains on the back of the data release. The Shanghai composite rose more than 0.5 percent to close at about 2,610.51 while the Shenzhen composite gained 0.607 percent to end its trading day at around 1,330.17. The Shenzhen component also advanced 0.592 percent to close at approximately 7,626.24.

Oil prices firmed on Monday after data showed China’s economic slowdown was not as big as some analysts had expected, with supply cuts led by the Organization of the Petroleum Exporting Countries also offering support. International Brent crude oil futures were at $62.83 per barrel at 0259, up 13 cents, or 0.2 percent, from their last close. Both oil price benchmarks had dipped into the red earlier in the session on fears that China’s 2018 economic growth figures would be weaker. China’s Septemb

Oil prices firmed on Monday after data showed China’s economic slowdown was not as big as some analysts had expected, with supply cuts led by the Organization of the Petroleum Exporting Countries also offering support.

International Brent crude oil futures were at $62.83 per barrel at 0259, up 13 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $53.92 a barrel, up 12 cents, or 0.2 percent.

Both oil price benchmarks had dipped into the red earlier in the session on fears that China’s 2018 economic growth figures would be weaker.

In an expected cooling, China’s economy grew by 6.6 percent in 2018, its slowest expansion in 28 years and down from a revised 6.8 percent in 2017, official data showed on Monday. China’s September-December 2018 growth was at 6.4 percent, down from 6.5 percent in the previous quarter.

Although the slowdown was in line with expectations and not as sharp as some analysts had expected, the cooling of the world’s number two economy casts a shadow over global growth.

Researchers at Bernstein Energy said the supply cuts led by OPEC “will move the market back into supply deficit” for most of 2019 and that “this should allow oil prices to rise to U.S. $70 per barrel before year-end from current levels of U.S.$60 per barrel.”

In the United States, energy firms cut 21 oil rigs in the week to Jan. 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report on Friday.

It was biggest decline since February 2016, as drillers reacted to the 40 percent plunge in U.S. crude prices late last year.

However, U.S. crude oil production still rose by more than 2 million barrels per day (bpd) in 2018, to a record 11.9 million bpd.

With the rig count stalling, last year’s growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

Tax cuts in China could be at the center of Beijing’s fight against a slowing economy amid an ongoing trade spat with the U.S., experts said. “Fiscal policy will be the front line of defense against mounting macroeconomic headwinds in 2019,” Haibin Zhu, J.P. Morgan’s chief China economist, wrote in a recent note. The challenges in China’s economy are already starting to show. That comes amid signs of softening demand — with recent data pointing to weaker exports and a slowdown in manufacturing a

Tax cuts in China could be at the center of Beijing’s fight against a slowing economy amid an ongoing trade spat with the U.S., experts said.

“Fiscal policy will be the front line of defense against mounting macroeconomic headwinds in 2019,” Haibin Zhu, J.P. Morgan’s chief China economist, wrote in a recent note.

The challenges in China’s economy are already starting to show. On Monday, Beijing reported its slowest GDP growth in decades, with official data showing that the economy grew 6.6 percent in 2018 compared to a year ago — it’s slowest rate of expansion since 1990.

That comes amid signs of softening demand — with recent data pointing to weaker exports and a slowdown in manufacturing activity — as the trade war with the U.S. appears to be taking a toll. Analysts such as Zhu say that Beijing will need to turn to fiscal measures, which typically means boosting government spending and cutting taxes, in order to stimulate the economy.

The Middle East’s largest public company is expanding its investments in China despite an expected slowdown in the country’s economic growth, its CEO said Monday. Investors and analysts have raised concern over China’s growth outlook, which has been dampened by weakened domestic demand and the trade war with Washington that’s hit exports. But SABIC, which is also the fourth-largest petrochemicals producer in the world, plans to keep investing in China. “I think Asia is growing and China is reall

The Middle East’s largest public company is expanding its investments in China despite an expected slowdown in the country’s economic growth, its CEO said Monday.

Speaking to CNBC during the World Economic Forum in Davos, Switzerland, Yousef Al-Benyan, chief executive of Saudi Arabian petrochemicals manufacturer SABIC, dismissed growing concerns about the future of the world’s second-largest economy.

“If you are a long-term player I think this is normal in any economy, they have to go through sometimes a bumpy road. And that is, I think, what we experienced with China today,” Al-Benyan told CNBC’s Hadley Gamble, referencing the ongoing trade war between China and the U.S. That, he said, “has really influenced some of the growth we expect out of China, but from a SABIC perspective we look at China as long term,” he said.

Investors and analysts have raised concern over China’s growth outlook, which has been dampened by weakened domestic demand and the trade war with Washington that’s hit exports. A recent Reuters poll found that the country’s growth is expected to slow to 6.3 percent this year from an expected 6.6 percent in 2018, which would be the lowest in 29 years. That figure was 6.9 percent in 2017.

But SABIC, which is also the fourth-largest petrochemicals producer in the world, plans to keep investing in China.

“I think Asia is growing and China is really driving this growth,” Al-Benyan said. “That is why we have improved our presence in China specifically, we are trying to put even more investment in China because we think the growth is there.”

After a string of headaches, some positive buzz appears to be brewing for China’s economy. The growing likelihood of even a limited trade deal with the United States combined with a ramp-up in Chinese stimulus are jointly making some experts more optimistic about the 2019 prospects for the world’s second-largest economy. LGT’s base forecast is for a deal by the middle of 2019, but Hofer said now is the time to get into Chinese markets. “I think it’s perfectly okay for investors to take on China

After a string of headaches, some positive buzz appears to be brewing for China’s economy.

The growing likelihood of even a limited trade deal with the United States combined with a ramp-up in Chinese stimulus are jointly making some experts more optimistic about the 2019 prospects for the world’s second-largest economy.

The escalating trade war was a dominant narrative in 2018 and has seemed to hit both countries’ economies and financial markets, with China largely seen as having taken the bigger blow.

The atmosphere, however, has changed after a 90-day truce began early in December. Negotiations in Beijing earlier this month were mutually hailed and more talks are in store. And the U.S. is reportedly even considering lifting tariffs to reach a deal. That is all helping create a positive atmosphere for some kind of agreement.

“The point is that both sides are now under a lot of pressure to get a deal done,” Stefan Hofer, chief investment strategist at LGT Bank in Hong Kong, told reporters on Tuesday, calling it “just something that has to happen.”

LGT’s base forecast is for a deal by the middle of 2019, but Hofer said now is the time to get into Chinese markets.

“I think it’s perfectly okay for investors to take on China exposure now in anticipation of that,” he said.

Political risk consultancy Eurasia Group said in a Thursday note it sees “increasing signs of momentum towards some type of interim deal” within this year. In its view, that’ll be driven mostly by U.S. President Donald Trump’s wish to calm markets and have a win to take into next year’s expected re-election bid.

That doesn’t mean, however, that the issue will be solved.

“The two sides have made only slight progress on the core structural issues at the heart of the trade dispute,” Eurasia Group cautioned.

Still, experts say reduced tensions and no increase in existing tariffs would mark a significant breakthrough. And that, combined with Chinese measures to support the economy point to a better outlook.

Some countries are scaling down or scrapping entire projects that are part of China’s Belt and Road Initiative amid mounting financial concerns over the continent-spanning venture. That revised stance not only confirms global fears over the terms of BRI financing, it could also indicate that developing countries are now more willing to prioritize sovereign interests over their need for foreign investment. But critics see it as a means to benefit China’s military, increase opportunities for Chine

Some countries are scaling down or scrapping entire projects that are part of China’s Belt and Road Initiative amid mounting financial concerns over the continent-spanning venture.

In recent months, developing nations such as Pakistan, Malaysia, Myanmar, Bangladesh and Sierra Leone have either canceled or backed away from previously negotiated BRI commitments, citing worries over high project costs and their impact on national debt and the economy.

That revised stance not only confirms global fears over the terms of BRI financing, it could also indicate that developing countries are now more willing to prioritize sovereign interests over their need for foreign investment.

The BRI — Beijing’s signature foreign policy program — is the superpower’s attempt to stretch its economic power across the globe through the construction of maritime and overland transportation links across Asia, the Middle East, Africa and Europe. But critics see it as a means to benefit China’s military, increase opportunities for Chinese companies and help Beijing gain political leverage.

Under the trillion-dollar endeavor, Chinese state-owned entities flush with cash offer participating countries cheap loans and credit to build large-scale projects such as ports and railways. These arrangements are usually negotiated government-to-government with below-market interest rates but many nations are growing wary over their debt loads.

Despite a slowing economy, China’s stock market has emerged as one of the best places in Asia to invest in due to its “very, very attractive” valuation, according to global investment house Fidelity International. There have been more and more signs of a slowdown in China’s economy, which is the largest in Asia and second-biggest globally. But when asked where is the safest place to put money in, Medha Samant, investment director for Asian equities at Fidelity International, replied: “It’s reall

Despite a slowing economy, China’s stock market has emerged as one of the best places in Asia to invest in due to its “very, very attractive” valuation, according to global investment house Fidelity International.

There have been more and more signs of a slowdown in China’s economy, which is the largest in Asia and second-biggest globally. The country has been embroiled in a trade fight with the U.S., which contributed to the more than 24 percent plunge in Chinese shares last year — their worst performance in a decade.

But when asked where is the safest place to put money in, Medha Samant, investment director for Asian equities at Fidelity International, replied: “It’s really north Asia, it’s being led by China, we think.”

“What matters to us as active investors is … what’s happening on the ground in China,” she said, adding that measures taken by Chinese authorities in recent months to support the economy have helped to raise to the attractiveness of Chinese stocks. Some of these measures include tax cuts and reduction in the amount that banks must hold as reserves.

U.S. stock futures traded lower on Thursday amid a flurry of corporate results, worries over China’s economy and Brexit uncertainty. Futures fell to near their lows of the session after Morgan Stanley reported earnings and revenue that fell short of Wall Street estimates. ET, Dow Jones Industrial Average futures were down 112 points, indicating a decline of 133 points at the open. Stocks rose in the previous session as investors cheered strong quarterly earnings from major banks like Goldman Sac

Stocks rose in the previous session as investors cheered strong quarterly earnings from major banks like Goldman Sachs and Bank of America. In its latest report on the economy, the Federal Reserve said on Wednesday that labor markets have tightened across the country as businesses struggled to find workers at any skill level while wages grew moderately.

On Wednesday, China’s central bank made its biggest ever daily net cash injection via reverse repo operations, pumping $82.73 billion into the banking system. The news came after comments from the Chinese state planner and Premier Li Keqiang suggested the country would inject more stimulus amid concerns of a slowdown in economic growth.

U.S. government debt prices rose on Thursday amid worries over China’s economy and Brexit uncertainty,The yield on the benchmark 10-year Treasury note fell to 2.718 percent, while the yield on the 30-year Treasury bond dipped to 3.064 percent. Bond yields move inversely to prices. The news came after comments from the Chinese state planner and Premier Li Keqiang suggested the country would inject more stimulus amid concerns of a slowdown in economic growth. Recent data has shown signs of weaknes

U.S. government debt prices rose on Thursday amid worries over China’s economy and Brexit uncertainty,

The yield on the benchmark 10-year Treasury note fell to 2.718 percent, while the yield on the 30-year Treasury bond dipped to 3.064 percent. Bond yields move inversely to prices.

On Wednesday, China’s central bank made its biggest ever daily net cash injection via reverse repo operations, pumping $82.73 billion into the banking system. The news came after comments from the Chinese state planner and Premier Li Keqiang suggested the country would inject more stimulus amid concerns of a slowdown in economic growth.

Such concerns appeared to weigh on investor sentiment Thursday. Recent data has shown signs of weakness in China’s economy, a sensitive issue as Beijing tries to resolve its trade dispute with the Trump administration over the course of a 90-day tariffs truce. The two countries have targeted each other’s economies with new duties on billions of dollars’ worth of imports.

As the U.S. and China negotiate on trade, Beijing is working overtime, pulling multiple levers to steady its lagging economy and boost markets. “China is probably the most serious one, and the one with the most ramifications for the rest of the world because China growth at 5 percent is $600 billion GDP growth in the world.” Even with a slowing U.S. economy, Williams said it’s not clear the Chinese will have a much stronger bargaining position. Anecdotally there are some signs the Chinese econom

As the U.S. and China negotiate on trade, Beijing is working overtime, pulling multiple levers to steady its lagging economy and boost markets.

China’s central bank on Wednesday injected a record $83 billion into the financial system, seeking to avoid a cash crunch. The move is the latest in a series of stimulus efforts by Chinese officials, who have been working to assure investors that more spending and other types of policy support would be forthcoming.

Premier Li Keqiang Wednesday acknowledged the economy faces difficulties and said the government aims to keep growth within a reasonable range through further stimulus.

In some regards, that could tip the scale eventually in trade talks. Trump administration officials have said China’s weak economy is a factor that has brought Beijing’s negotiators to the table. But economists expect China’s economy to stabilize by the middle of the year, around the time some expect U.S. growth to head lower, to a rate of just under 2 percent after a first half pace of closer to 2.5 percent.

“China has shifted gears, introducing a steady drumbeat of new stimulus measures. Meanwhile US fiscal policy is stuck in gridlock and the shutdown is actually causing a modest tightening of policy,” wrote Bank of America Merrill Lynch economists in a recent note. The Fed has shifted from rate-hiking mode to a more cautious stance, “but it probably needs to see clearer signs of weakness before it cuts rates.”

Weaker U.S. growth is coming as the effects of the massive tax cuts and other stimulus begins to fade, leaving the Trump administration with fewer bullets. With the Fed’s easier posture, markets now see the potential for no rate hikes at all out across the next year.

“Now you have a slowdown and I think it’s probably a slowdown as opposed to you’re on the way to a deep recession,” said J. P. Morgan Chase CEO Jamie Dimon. “China is probably the most serious one, and the one with the most ramifications for the rest of the world because China growth at 5 percent is $600 billion GDP growth in the world.”

Dimon, speaking at the Economic Club of New York on Wednesday, said China is able to push policies in a way the U.S. cannot.

“The thing about China is they have the wherewithal,” he said. “They can macro manage in a way you can’t do in the United States. There’s seven people that control the nation.”

China’s ability to push its policies “kind of works. It will work for another five years, 10 years,” Dimon said. “They’re trying to work that through to keep jobs, peace, prosperity. Now my view is they’ll accomplish that in the next couple of years.”

Source: Capital Economics

Whether China’s ready use of stimulus will help lead it to a strong posture in trade talks has yet to be seen.

“The direct impact of tariffs on China’s economy so far, is hard to identify,” said Mark Williams, chief Asia economist at Capital Economics. Williams said Chinese exports to the U.S. have held up fairly well, a trend that could change, but U.S. exports to China have fallen off sharply.

Even with a slowing U.S. economy, Williams said it’s not clear the Chinese will have a much stronger bargaining position. “I’m a little bit skeptical,” he said, noting that Chinese exports don’t contribute meaningfully to the U.S. economy except for some sectors like soybean farmers.

“They are not a big reason why the U.S. economy is slowing. I don’t think it gives China a lot of leverage,” Williams said. “What might matter more to President Trump is whether the S&P and the U.S. stock market is falling sharply. That might make the U.S. side more eager to cut a trade deal.”

Anecdotally there are some signs the Chinese economy is getting hit. Apple, for instance, blamed a trade-related slowing in China for a drop off in iPhone sales.

Barclays economists said the 0.6 percent decline in import prices in December had to do with a decline in energy and imported inflation pressures. Chinese firms may also have responded to trade pressures.

“Anecdotal evidence suggests that in response to tariffs from the US, Chinese firms may be lowering prices in order to remain competitive in the US market,” the economists noted. “This would be consistent with monthly import price patterns recently — import prices from China were rising at a modest pace in early 2018, but started to turn negative in the middle of the summer, when trade tensions and tariffs intensified.”

Williams said the stimulus being offered by Beijing is smaller than during other periods when the government stepped in.

“There’s been a steady drip of announcements but I think it’s important to note that they don’t add up to all that much, certainly in comparison with previous bouts of stimulus we’ve seen from China’s government. This time they are not going all in,” he said.

“If we compare it with what they did in 2015/2016, the fiscal and monetary stimulus we’ve had so far is perhaps a quarter of the size so far. They’re still announcing things every couple of days. It’s still adding up.” Williams estimated the stimulus could be half the size of the last one, but a quarter size the stimulus during the financial crisis.

“I think China is doing what China does best,” said Joseph Lupton, global economist at J. P. Morgan Chase. “They inundate you with a ton of headlines and that’s going to provide an extra level of calm to the slowing that’s taking place. I don’t want to water it down. I think what they’re doing…will have an effect on the economy, but it’s not going to have that type of affect after the financial crisis when they really did bring out the bazooka and boosted growth over the next couple of years.”

Lupton said he ultimately expects the U.S. and China to work out a trade deal. But while China may compromise on intellectual property and other U.S. demands, it’s probably not going to give on its program aimed at growing in areas of new technologies, ‘Made in China 2025.’